| Luminar: Riskier world and shares repurchase Nov-2021 (Q3 data) |
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The Story
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| This is my take on Luminar's value after the update to the riskfree rate and the share repurchase by the company. |
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The Assumptions
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| Base year | Years 1-4 | Years 5-10 | After year 10 | Link to story | |
| Revenues | 35.71%➡115.86% | 80.10%➡3.49% | 1.55% | Grows according to the guidance but -10% in 2030 to account for the narrative change due to semiconductor crisis. Risk-free rate for the terminal year. | |
| Operating margin | (471.08%) | (297.74%)➡36.65% | 37.86%➡18.95% | 18.00% | Grows according to the guidance up to 2025, then falls back to 3rd quartile of mature Semiconductors firms in stable growth. |
| Tax rate | 27.00% | 27.00% | 27.00% | 27.00% | Marginal tax rate according to 2021 KPMG data. |
| Reinvestment | Sales/Capital = 1.03 ➡ 0.71 | 36.10% | Median sales/capital of all Semiconductors firms to the median of mature Semiconductors firms. | ||
| Cost of Capital | 2.56%➡3.14% | 3.33%➡4.29% | 4.49% | Moving towards Auto Parts industry average on a 2% riskfree rate. | |
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The Cash Flows
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| Revenues | Operating Margin | EBIT | EBIT (1-t) | Reinvestment | FCFF | Implied ROIC | |
| Base year (2021) | $22 | (471.08%) | ($103) | ($103) | (31.76%) | ||
| 1 (2022) | $30 | (297.74%) | ($89) | ($89) | $8 | ($97) | (26.72%) |
| 2 (2023) | $84 | (109.44%) | ($92) | ($92) | $54 | ($146) | (23.72%) |
| 3 (2024) | $331 | 4.98% | $17 | $17 | $258 | ($241) | 2.56% |
| 4 (2025) | $715 | 36.65% | $262 | $262 | $416 | ($154) | 24.70% |
| 5 (2026) | $1,288 | 37.86% | $488 | $434 | $645 | ($212) | 25.41% |
| 6 (2027) | $2,090 | 34.07% | $712 | $520 | $941 | ($421) | 19.64% |
| 7 (2028) | $3,103 | 30.29% | $940 | $686 | $1,240 | ($554) | 17.65% |
| 8 (2029) | $3,936 | 26.51% | $1,043 | $762 | $1,067 | ($305) | 15.37% |
| 9 (2030) | $4,430 | 22.73% | $1,007 | $735 | $662 | $72 | 13.09% |
| 10 (2031) | $4,584 | 18.95% | $868 | $634 | $218 | $416 | 10.87% |
| Terminal year | $4,655 | 18.00% | $838 | $612 | $221 | $391 | 4.29% |
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The Value
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|---|---|---|
| Terminal cash flow | $391 | |
| Terminal cost of capital | 4.49% | |
| Terminal value | $13,311 | |
| PV (Terminal Value) | $9,505 | |
| PV (CF over next 10 years) | ($1,459) | |
| Sum of PV | $8,046 | |
| - Adjustment for distress | $724 | Probability of failure: 10.00% |
| - Debt & Minority Interests | $262 | Based on Ba1 rating from Moody's |
| + Cash & Other Non-operating assets | $546 | |
| Value of equity | $7,606 | |
| - Value of equity options | $266 | |
| Number of shares | 344.54 million | |
| Value per share | $18.48 | Stock was trading at $14.75 |
In millions USD except Value-per-share.